Islamic militias in Libya undermine investor confidence
Libya's civil war has crippled the country's economy and disrupted its telecommunications sector. It is estimated that more than S1 billion worth of telecom infrastructure was destroyed, including about 20% of the country's mobile tower sites. Reconstruction efforts continue to be stymied by political and military disturbances which affect much of the country, while with two opposing administrations, in Tripoli and Tobruk, there is no consensus as to how to rebuild infrastructure on a national scale. In early 2015 the state telco (along with many other businesses) decamped to neighbouring Malta, and since then both rival administrations have fought in the Maltese courts in an attempt to assume control of the company. GDP growth fell to a negative 14% in 2013 and negative 24% in 2014, affected by intensified civil unrest, though there are indications that positive growth of up to 7% may be possible for 2015.
Under the Gaddafi regime, virtually the entire telecom and internet sector was in government hands, with the unique situation of three government-owned mobile networks supposed to compete with each other. One of these networks, Libyana, was to have been privatised through an IPO in late 2014, though instead elements of the operator's mobile network were split off to create a separate operator serving the eastern part of the country.
A new Telecommunications Law has been drafted and the government is in the process of establishing an independent regulatory authority. Since the downfall of the old regime, 25 ISPs have already been licensed to compete with the government-owned former monopoly, as well as 23 VSAT operators.
Despite the destruction, Libya's telecommunications infrastructure is superior to those in most other African countries. Massive investments had been made by the former government into a next-generation national fibre optic backbone network. There was considerable expansion of DSL and WiMAX broadband services, and new international fibre connections and upgrades made to existing ones. Libya also had one of Africa's first Fibre-to-the-Premises (FttP) deployments. The first terabit international fibre optic cable landed in the country in 2010, followed by a second in 2013. Investments into telecommunications infrastructure totalling S10 billion were earmarked for the 15 years to 2020, though given the civil strife in recent years it is difficult to say how much of this will be put into effect.
With one of the highest market penetration rates in Africa, the mobile voice market is approaching saturation, supported by some of the lowest tariffs on the continent and one of the highest per capita GDP levels. Opportunities remain in the broadband sector where market penetration is still relatively low. So far only one of the mobile networks has launched third-generation (3G) broadband services. Fixed-line penetration has fallen significantly as a result of the war but is also expected to see a renaissance, including fibre, as the demand for very high-speed broadband increases.
Militia activity continues to damage telecom infrastructure; Government approaches ITU for help to develop telecom regulatory framework; Alternative Islamist government declared, edging Libya into further unrest; Ericsson and NSN contracted to deploy a national mobile broadband network; Libyana's mobile network split in two; Alcatel-Lucent signs contract with LITC to build a 1,000km subsea cable system linking Tripoli to Benghazi.
Estimated market penetration rates in Libya's telecoms sector 2015 (e) Market | Penetration rate Mobile (SIM cards) | 142% Fixed | 10% Internet | 24% (Source: BuddeComm based on various sources)
Companies mentioned in this report:
Al-Madar, Libyana, LibyaPhone, Libya Post and Telecommunication Information Technology (LPTIC), General Posts and Telecommunications Company (GPTC), Hatif Libya, Libya International Telecom Company (LITC), Libya Telecom & Technology (LTT), LAP Green Networks, Gateway, Thuraya, Phoenicia Group, Hermes Communications, Wiseband, Bentley Walker, Virtual Dimensions, Ericsson, Nokia, Alcatel-Lucent, Huawei Technologies, ZTE, Trans-Sahara.